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Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. The words "anticipate," "preliminary," "expect," "believe," "intend" and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results to differ materially from the anticipated results expressed in these forward-looking statements. The risks and uncertainties that may affect the Company's results include the growth rate of the Company's revenue and market share; the receipt of new, and the non-termination of existing, contracts; the Company's ability to effectively manage its business functions while growing its business in a rapidly changing environment; the Company's ability to achieve financial and nonfinancial covenants and requirements of our debt agreements; the Company's ability to adapt and expand its services in such an environment; the quality of the Company's plans and strategies; and the Company's ability to execute such plans and strategies. Other important information regarding factors that may affect the Company's future performance is included in the public reports that the Company files with the Securities and Exchange Commission, including the information under Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2012. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of other events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

PMFG, Inc.

Condensed Financial Information

(In thousands, except per share amounts)

Three Months Ended December 29,

Three Months Ended December 31,

2012

2011

Operating Results

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments(b)

Non-GAAP

Revenues

$ 31,452

$ --

$ 31,452

$ 37,721

$ --

$ 37,721

Cost of goods sold

19,923

--

19,923

25,245

(34)

25,211

Gross profit

11,529

--

11,529

12,476

34

12,510

Operating expenses

10,669

--

10,669

11,498

(2,064)

9,434

Operating income (loss)

860

--

860

978

2,098

3,076

Other income (expense):

Interest income

7

--

7

7

--

7

Interest expense

(210)

--

(210)

(443)

--

(443)

Loss on extinguishment of debt

--

--

--

--

--

--

Foreign exchange gain (loss)

117

--

117

(211)

--

(211)

Other income

32

--

32

3

--

3

Income (loss) before income taxes

806

--

806

334

2,098

2,432

Income tax (expense) benefit

(213)

--

(213)

(292)

(713)

(1,005)

Net earnings (loss)

$ 593

$ --

$ 593

$ 42

$ 1,385

$ 1,427

Less net earnings (loss) attributable to noncontrolling interest

127

--

127

(30)

--

(30)

Net earnings (loss) attributible to PMFG

$ 466

$ --

$ 466

$ 72

$ 1,385

$ 1,457

Earnings (loss) applicable to PMFG common stockholders

$ 466

$ --

$ 466

$ 72

$ 1,385

$ 1,457

Basic loss per share

$ 0.02

$ 0.02

$ 0.00

$ 0.08

Diluted loss per share

$ 0.02

$ 0.02

$ 0.00

$ 0.08

Weighted-average shares outstanding

Basic

20,920

20,920

17,679

17,679

Diluted

20,935

20,935

18,327

18,327

Adjusted EBITDA

Net earnings (loss)

$ 593

$ 1,427

Depreciation and amortization

693

634

Interest expense, net

203

436

Income tax expense (benefit)

213

1,005

Adjusted EBITDA

$ 1,702

$ 3,502

Six Months Ended December 29,

Six Months Ended December 31,

2012

2011

Operating Results

GAAP

Adjustments(a)

Non-GAAP

GAAP

Adjustments(b)

Non-GAAP

Revenues

$ 64,429

$ --

$ 64,429

$ 66,809

$ --

$ 66,809

Cost of goods sold

41,508

--

41,508

45,625

(34)

45,591

Gross profit

22,921

--

22,921

21,184

34

21,218

Operating expenses

21,601

--

21,601

21,353

(2,064)

19,289

Operating income (loss)

1,320

--

1,320

(169)

2,098

1,929

Other income (expense):

Interest income

17

--

17

16

--

16

Interest expense

(315)

--

(315)

(870)

--

(870)

Loss on extinguishment of debt

(291)

291

--

--

--

--

Foreign exchange gain (loss)

35

--

35

(668)

--

(668)

Other income

33

--

33

24

--

24

Income (loss) before income taxes

799

291

1,090

(1,667)

2,098

431

Income tax (expense) benefit

(212)

(99)

(311)

539

(713)

(174)

Net earnings (loss)

$ 587

$ 192

$ 779

$ (1,128)

$ 1,385

$ 257

Less net earnings (loss) attributable to noncontrolling interest

432

--

432

(49)

--

(49)

Net earnings (loss) attributible to PMFG

$ 155

$ 192

$ 347

$ (1,079)

$ 1,385

$ 306

Earnings (loss) applicable to PMFG common stockholders

$ 155

$ 192

$ 347

$ (1,079)

$ 1,385

$ 306

Basic loss per share

$ 0.01

$ 0.02

$ (0.06)

$ 0.02

Diluted loss per share

$ 0.01

$ 0.02

$ (0.06)

$ 0.02

Weighted-average shares outstanding

Basic

20,919

20,919

17,675

17,675

Diluted

20,934

20,934

17,675

18,276

Adjusted EBITDA

Net earnings (loss)

$ 779

$ 257

Depreciation and amortization

1,397

1,312

Interest expense, net

298

854

Income tax expense (benefit)

311

174

Adjusted EBITDA

$ 2,785

$ 2,597

December 29,

June 30,

Condensed Balance Sheet Information

2012

2012

Current assets

$ 122,540

$ 122,286

Non-current assets

62,447

60,993

Total assets

$ 184,987

$ 183,279

Current liabilities

$ 42,791

$ 45,019

Other non current liabilities

8,720

7,374

Total equity

133,476

130,886

Total liabilities and equity

$ 184,987

$ 183,279

(a) Adjustments in the six months ended December 29, 2012 relate to the loss on extinguishment of debt.

(b) Adjustments in the three and six months ended December 31, 2011 relate to the accelerated vesting of restricted stock grants

STATEMENT REGARDING NON-GAAP RESULTS

PMFG, Inc. has provided a reconciliation of non-GAAP measures in order to provide the users of this financial information with a better understanding of the impact on our financial results resulting from the loss of extinguishment of debt in the six months ended December 29, 2012 and from the accelerated vesting of restricted stock grants in the three and six months ended December 31, 2011. Management believes that excluding this item from the Company's financial results provides investors with a clearer perspective of the current underlying operating performance of the Company, a clearer comparison between results in different periods and greater transparency regarding supplemental information used by management in its financial and operational decision making. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measures should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP.

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